Introduction
Immigration is one of the most hotly debated topics in American politics
today. Although this is a topic that has a great deal to do with economics,
economic theory is rarely used in the debate. Opponents of more liberal
immigration policies often cite that immigrants hurt the economic welfare
of natives of the country. They believe that they steal jobs from unskilled
Americans and use up public goods without supporting the government by paying
a significant amount of taxes.
This paper is broken down into six different sections. The first section
will examine the effects of a more liberal immigration policy on the world
economy. The second section will deal with the common concerns that natives
have with a more liberalized immigration policy. The third section is an
immigration case study looking at the effects of a large migration of Cubans
to Miami. The fourth section looks at the fiscal effects of large numbers
of new immigrants. The fifth section examines the overall benefits to the
country after liberalizing immigration policies. The final section will
be a conclusion summarizing the arguments made in the paper.
Effects of Immigration on Global Economy
The effects of immigration on the global economy are tremendous. There are
some economists that believe that a global economy with very liberal immigration
policies has the potential to be double the current level of world wealth.
The theory behind this claim is that most immigrants are coming from low-income
countries to developed countries with higher wages. This means that the
marginal product of labor in these more developed countries is significantly
higher than in that of the lesser developed country. The immigrant, therefore,
would be working in the country where he of more value, and makes the greatest
return possible. More liberal immigration policies would also cause the
international wages for employees in similar fields across the globe to
become more comparable. This would cause the wages of the poorest workers
in the world to rise.
Concerns for the Domestic Economy
Many people in the United States are very concerned that increased immigration
would reduce the wages and increase the unemployment for native American
citizens. They also believe that immigrants will cost the country in areas
such as health care, education and pensions. The added costs that immigrants
will cause in the United States will mostly be felt at the state and local
government level. These new immigrants could also put a strain on public
goods. Many of the public goods, however, will not have to be increased
due to a large amount of immigration. The country does not need to increase
the size of its military to support the larger population. This means that
the cost of such goods will actually be spread among more people, making
it cheaper for the natives. There are some public goods, however, that would
have a negative effect for the natives. These include infrastructure public
goods such as transportation goods and roads. Roads will become more congested
with a higher number of immigrants so this could be detrimental to the economy.
Since most of the people immigrating to the United States will be unskilled
workers, it is possible that they will be stealing jobs from the native
unskilled workers. These positions are also low-income jobs, so they will
not be supporting the country much in the way of taxes.
Many of these opinions of immigration are unwarranted. In areas of high
immigration, studies have shown that native workers' wages have not dropped
and unemployment gone up by a significant amount. This result can be explained
by the fact that the immigrants are not only additional labor in the economy,
but also additional consumers. They increase the amount of demand for labor
in the economy. Another reason the effects of immigration have not been
very large is that immigrants for the most part compete against each other
for the low level jobs in an economy. Native unskilled workers for the most
part do not compete against the immigrants for most jobs. Immigrants also
provide the rest of the country with many benefits. Since they are able
to provide cheaper labor, prices in the economy are able to decrease. Even
though the immigrants are working for the most part in low-income jobs,
they are still paying taxes and contributing to society.
The United States is also in the middle of a population aging problem. The
Baby Boomers generation is approaching retirement age and many economists
are concerned that the current working population will not be able to support
such a large retiring group. Many people believe that pay-as-you-go programs
for the elderly, such as Social Security and Medicare, will not be sustainable
in the future. One way to solve this problem would be to liberalize the
immigration policies in the country. Immigrants would be able to contribute
to solving this problem by immediately joining the working population and
paying social security taxes. For this to be successful, however, immigration
would need to rise by over 25% of current levels.
An Immigration Case Study
Southern Florida is a region of the country that annually receives a high
level of immigrants. Many of these immigrants come from Cuba. In 1980, approximately
125,000 Cubans arrived in Miami, Florida. Card did an economic study on
the effects of such a large increase to the labor supply of the city. The
city's labor supply was increased by 7%, but there were no significant effects
on the native workers. Card looked at the wages and employment levels of
native whites and African-Americans in Miami and saw no major changes.
Analysis of Fiscal Effects of Immigration
The effects of immigration on the United States economy must be analyzed
from a long-term perspective. A single immigrant, due mostly to a large
costs at the state and local level, will cost the national economy over
13,000 dollars in the first 25 years in the county. It has been shown that
the descendants of these immigrants, however, will be much more productive
for the economy. After 50 years in the country, the immigrant will end up
bringing in over 10,000 more dollars to the domestic economy. Therefore,
immigration may, initially, raise taxes for natives in the country. In the
long run, though, natives will see their taxes decline. The reason for this
gradual increase in an immigrant's value, is that the education level of
his or her family will rise over time. Another positive aspect for our economy
is that immigrants' fertility levels are higher than that of natives. This
will help support the retiring baby-boomers generation. It is also very
important to note that the immigrants' ages are very important when looking
at the fiscal effects of immigration. Younger immigrants have much of their
working lives ahead of them and will contribute a great deal to the economy.
Older immigrants will not work for very long, and will use up much of the
country's benefits such as social security without having contributed very
much.
A possible solution to the fiscal issues presented above should be less
restrictive than the current strict immigration laws. The government should
implement policies that limit immigrants' access to public goods so the
fiscal burden on the natives is not as high. There have been new laws passed
that allow the government to exclude aliens from benefits such as Medicaid
and food stamps. The National research council estimates that these new
laws, which restrict alien access to public goods, will save the country
over 8,000 dollars per immigrant. Based on the results of this finding,
liberalized immigration policies would be very beneficial to natives.
Benefits of Liberalizing Immigration
Currently the United States has very strict quotas regarding families wishing
to immigrate to the country. This system leads to well-qualified families
having to wait in excess of ten years to be able to enter the country. This
limits the total economic contributions for our economy. The National Research
Council says "immigrants arriving at earlier ages make a significantly
larger net fiscal contribution because they will spend more of their working
lives - and thus pay more taxes - in the United States." The current
policies curb the amount of gains the economy can receive through the free
exchange of labor. If an immigrant reaches the country before he reaches
the age of 40, he will most likely make a positive contribution to the economy.
This means that a more liberal immigration policy would also benefit the
natives because the government's tax revenues will rise. Currently, out
of the 140,000 visas given out for immigration annually, only about 10,000
go to unskilled workers. This quota system should be adjusted, because unskilled
workers can still provide our economy with a positive net contribution.
The United States should also consider liberalizing their family immigration
quota policies. The National Research Council believes that allowing in
families will be beneficial because they will pay more in total taxes than
they will use in public benefits. Liberalizing the family immigration policy
will also encourage more skilled workers to immigrate to the United States.
They will be able to come to this country with their entire families.
The United States needs to liberalize the current quota system for immigration.
Doing so would not only benefit potential immigrants, but also current Americans.
Due to the large increase in the working class, the taxes to natives would
decline over time.
Conclusion
Liberalizing the immigration policies of the country would be beneficial
to everyone. It would give unskilled workers an opportunity to earn a good
living and become a contributing member of society. It would help the world
economy because the workers go to the area with the highest marginal product
of labor making the global economy more productive. It also lessens the
global income gap for unskilled workers. More immigration also improves
the life of natives of the country. Immigrants provide the country with
cheap labor which would drive the cost of most products to drop. They also
will help the country deal with the aging population problem by contributing
to pay-as-you-go policies such as Social Security. The benefits of a higher
level of immigration clearly outweigh the negative aspects. The immigration
debate in the United States is one that goes much deeper than economics.
From an economics point of view, higher immigration would benefit everyone
involved. The politics behind the issue are very important in examining
the new policies. Looking at the issue from an economic point of view, however,
The United States should definitely work towards liberalizing their immigration
policies.
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